Financing a home is most likely one of the largest loans you will ever have to take. Most commonly, this is in the form of a mortgage. Mortgages have several factors that go into their structure, including:
- Principal interest payments
When you need a mortgage for your home you sign a contract that legally states your agreement to pay off the loan, as well as interest. Your home becomes the collateral, which means if you are unable to pay back the debt, your home will go into foreclosure. This is when the lender can sell the property to pay for the debt.
Obtaining a mortgage also includes principal and interest. Generally, the down payment on the principal (the amount of the loan) is around 20 percent and interest is charged for your monthly payments. Another aspect included in mortgages is property taxes, as well as a requirement for homeowners insurance.
Factors that Qualify You for a Mortgage:
- Your income and other expenses
- Credit score
- Employment history
Another factor to determine when looking into financing your home is if you need a fixed-rate mortgage or an adjustable-rate mortgage. Learning the benefits of each will help you figure out which would be best for your situation.
Whether you are a first-time homebuyer or have been through this process before, having a knowledgeable realtor on your side will greatly benefit you. For more information about financing a home, or have any questions answered, please contact our experts at Tony Puma today!